Why are Kroger, Sprouts Farmers Market, Costco and other big retailers making private label a centerpiece of their growth strategies?
While store brands haven’t gained much share over national brands in recent years, industry experts say their time is coming, for many reasons. The grocery landscape seems to have arrived at the perfect moment of consumer demand for more affordable but trustworthy products, and retailers’ ability to deliver quality products that meet clean label demands—and for a cheaper price than national brands.
But store brands are no longer confined to “value” positioning—now there are many premium, natural and organic private label brands that stand on their own on the shelves with unique offerings and flavor profiles, and attractive packaging. And with more non-GMO, organic, gluten-free options on the shelf than ever, a trusty store brand can take a lot of the work out of the purchasing decision for consumers.
“There is considerable upside potential for private label in organic and specialty segments because these are categories where the benefits clearly outweigh the brand,” Don Stuart, managing partner at Cadent Consulting, told Frozen & Refrigerated Buyer.
Indeed, half of millennials in a recent Cadent survey reported having no real preference between store brands and national brands.
The U.S. expansion of discount chains Aldi and Lidl, which for many products offer only one option that they source directly from manufacturers, may be another important force at play in getting consumers more comfortable with store-brand products. The same is true of the Amazon-Whole Foods merger, which made Whole Foods’ popular 365 Everyday Value brand available online, and the emergence of e-commerce retailers like Brandless and Thrive Market, which offer their own brand natural and organic offerings.